On Friday IC Places, Inc. (PINKSHEETS: ICPA) announced they had formed a strategic partnership with EzVip.com in which they will offer visitors to icplaces.com “direct access to the hottest night clubs and best events around the world.”Already one of the most actively traded penny stocks over the past several days, ICPA has seen volume top the 9 million mark in the first thirty minutes of today’s session and shares have climbed as high as 0.0180, a six-month high, and an impressive jump over the 50-day moving average of 0.0037.
Described as a multimedia entertainment company, ICPA produces “Made for TV” and “New Media” video programs that are watched on several different platforms. The driving force of their business model is IC Places, what the company calls a network of 350 city based entertainment websites that “offers a virtual keyhole view of life in each community.”
ICPA may be stretching it a bit when they say “Every unique aspect of a city’s social, business, and cultural life is available right at each city’s IC Places homepage.” In fact, if you actually visit icplaces.com and select a city to find information about “social, business and cultural life” then chances are the content you find will be extremely limited.
Unfortunately for ICPA the idea of creating individual city sites that are designed to specifically detail the social, business and cultural life is not new. Even more bad news, it’s not easy to attract visitors to these sites. Limited visitors means limited revenue and ICPA knows this all too well at this point. Obviously a business model like that of ICPA is dependent upon advertisers and judging by their most recent quarterly report they are in really bad shape.
For the three month period ended September 30, 2011 ICPA managed to generate $7,529 in advertising revenue and for the nine-month period ended September 30, 2012 they generated $21,215 in advertising revenue. Both those figures are slight improvements over the same period one year earlier, $7,418 and $17,918, but they are certainly not impressive to investors.
Perhaps even more distressing than the limited revenues from advertising are the operating expenses that ICPA is reporting. For the three month period in which they had revenues of $7,529 they had operating expenses of $174,971 while the nine month period they had operating expenses of $508,277. That’s not exactly the mark of a successfully run operation.
It would be easy to go through ICPA’s plan of operation and pick apart their vision but that’s really not necessary. They want to raise money to move into a new phase of development and the problem is their initial phase of development hasn’t exactly been successful. Looking at today’s press release regarding the agreement with EzVip.com it’s hard to see where they will be the beneficiary.
Here’s how ICPA makes money off this agreement, “Under the agreement EzVip.com will pay IC Places a percentage of each booking it generates. IC Places Night Life sections will offer direct links to reserve tables at the best clubs in each city using the EzVip.com engine.” So for ICPA to make any money off of this agreement visitors need to not only go to the city site, but then go to the night life section, find a club or restaurant they like, and then make a reservation from the link provided. That’s a lot of steps that have to go right just to make a percentage of a percentage.
The biggest problem with this model is that most people looking for restaurants, clubs, events, etc. in a particular city simply use a search engine to find results or go to popular review sites that offer feedback from customers. These sites usually have a link to the venue, club, restaurant, etc. so there is nothing that special about what ICPA is offering.
Needless to say ICPA is also struggling with money, having been “financing its operations primarily through loans and advances from the majority shareholder.” This is not a sustainable practice for any business and with revenues as low as they are and the fact the company doesn’t see those revenues jumping any time soon the future doesn’t look so bright.
